The Longevity Conundrum: Ensuring Your Retirement Lasts as Long as You Do

Written By: Susannah Orzolek

If you live to age 100, will your retirement savings last as long as you do? Most of us like the idea of living a long and healthy life but how do we prepare ourselves for a potential financial “risk” of longevity?

With life expectancies rising and more people living well into their 90’s, it’s crucial to consider whether your retirement savings will endure for the duration of your life.

Risk to Income

One significant financial risk associated with increased longevity is the possibility of outliving your savings. Despite the desire for a long and healthy life, many individuals fail to account for this expense when calculating their retirement funds and planning for the future. 

For couples, especially, it’s essential that both partners are actively involved in the financial planning process, particularly considering that women statistically outlive men in retirement. More than 100,000 people today are age 100, and 78 percent of them are women! It’s important to make sure to have a sound income plan for your surviving spouse.

The cost of such longevity can be staggering. Let’s say you retire at 62 and are looking at 38 years of retirement ahead of you. If you plan to take income of $60,000 per year, that amounts to a daunting $2.3 million!  While Social Security provides some support, it’s unlikely to cover all expenses or keep up with inflation at the same rate, necessitating careful financial planning early on.

Developing a solid income plan that incorporates the impact of inflation and potential long-term care costs is the first step to mitigate this risk.

Tax Impact

Surprisingly, one major oversight in retirement planning is the impact of taxes. A startling statistic reveals that only about 30 percent of Americans have a plan to minimize taxes on their retirement savings. Failure to address tax implications, especially when relying solely on 401(k) savings, can significantly impact your ability to retire comfortably.

Even in the short-term, we know the clock is ticking on our current tax rates – they expire at the end of 2025.  It’s not so much a matter of if taxes will go up, but when

To mitigate this risk, retirees can employ various strategies to reduce their tax burden in retirement, such as Roth conversions, strategic withdrawals, and utilizing tax-advantaged accounts. Crafting a written retirement income tax strategy is paramount to avoid pitfalls like overspending or overlooking tax considerations. Find a retirement planner who works for you to find ways to put money back in your pocket for you and your family.

Investment Strategy

Recent studies highlight a concerning gap between Americans’ perceived retirement needs and their actual savings. Inflation plays a significant role in this disparity, with people now estimating they need a record $1.46 million to retire comfortably. However, achieving this goal remains elusive for many due to insufficient savings and inadequate investment planning.

A key element to growing your savings, even if you are no longer earning income or contributing to your retirement, is developing an investment strategy that offers both growth and safety. How much growth and how much safety you need will vary depending on your savings, circumstances, lifestyle, and goals for your retirement. This is why it’s important to get an individualized investment plan that suits your needs and the goals you have for you and your family.

Navigating the complexities of retirement planning requires a proactive approach that considers both longevity and tax implications. By engaging in comprehensive financial strategies and seeking professional guidance, you can better ensure your retirement savings endure for a lifetime. 

After all, the goal isn’t just to retire—it’s to retire with financial security and peace of mind.

Say What?

Turns out coin flips are NOT exactly 50/50 after all. A team of researchers analyzed the results of more than 350,000 coin tosses to determine whether the results are truly 50/50 and found “fair” coins are slightly more likely to land the same way they started. A coin flipped into the air and caught in the hand had a 50.8 percent change of landing on the same side they started from. But the odds varied slightly depending on who is actually flipping the coin. So … it’s still a toss-up. 

This week in history

1775 – American Revolution begins with the Battle of Lexington.

1961 – The Bay of Pigs invasion began in April of 1961. 

1964 – The Ford Mustang made its debut at the World’s Fair in Flushing Meadows, New York. 

2002 – The 10,0000th episode of “General Hospital” airs. It debuted in 1963 and was the longest running soap opera and longest-running program ever produced in Hollywood.

2016 –  Prince died at age 57, leaving behind a valuable and complicated estate with no valid will.  

What did it cost? (ham and cheese omelet breakfast meal)

1974 – $1.95

2004 – $6.19

2024 – $11.19

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